Interest rates slump to year's lowest

The Associated Press

Tuesday

Jun 29, 2010 at 12:01 AM

Interest rates fell to new lows for the year Monday in the bond market after concerns grew that a global rebound is stalling.

The yield on the benchmark 10-year Treasury note maturing in May 2020 fell to 3.03 percent from 3.11 percent Friday. That was the lowest yield since April 2009. Its price rose 78.125 cents per $100 in face value to $104.03125.

The drop in rates would be welcome news for borrowers because the 10-year yield is tied to interest rates on mortgages and other consumer loans.

The increased demand for safety holdings came after the government said that consumers put more money away than they spent last month. That can be good for individuals but could slow the rebound if consumers continue to be cautious. The Commerce Department said consumer spending rose 0.2 percent last month, more than the 0.1 percent growth forecast by economists polled by Thomson Reuters. Personal income rose 0.4 percent.

Traders have been on edge for months that everything from a loan default in weak European countries like Greece to fatigue over government spending elsewhere could threaten the global rebound. At a weekend meeting, leaders from the G-20 nations agreed industrialized countries would cut deficits by half by 2013. They also pledged not to take away the support of government spending too quickly, however.

In other trading, the yield on the 30-year Treasury bond maturing in May 2040 fell to 4 percent from 4.06 percent. Its price rose $1.125 to $106.40625. The yield on the two-year note that matures in May 2012 fell to 0.63 percent from 0.66 percent. The price rose 6.25 cents to $99.96875.

Never miss a story

Choose the plan that's right for you.
Digital access or digital and print delivery.